Trading Revenues Confirm Volatility Remains Monetisable

Trading revenues across the group grew 10-15 percent year-over-year, driven by continued equity and fixed income volatility around Fed policy uncertainty and the Iran war. This is not the extraordinary trading environment of 2020-2022, but meaningfully above the depressed levels of 2023. For analysts covering the sector, current market volatility remains a genuine tailwind for franchise trading businesses. For the broader read across, sustained volatility indicates investor uncertainty about macro variables, consistent with the higher-for-longer inflation and rate regime.

Investment Banking Fees Recovering, But Unevenly

Equity capital markets activity has been strong in the first half of 2026, driven partly by the SpaceX $86 billion IPO in June, the largest ever, plus a broader reopening of large-cap IPO activity. All five banks reported meaningful ECM fee contribution. M&A activity has been more muted, reflecting geopolitical uncertainty and rate environment concerns that have made strategic acquirers cautious. Capital raising is recovering; strategic M&A remains constrained by uncertainty. That constraint matters: it suggests corporate management teams are not confident enough to commit to major transformations.

Loan Growth Is Accelerating

Perhaps the most important signal is loan growth. After three consecutive years of loan growth running below historical averages, the trend has been improving through 2025 and accelerated into Q2 2026. Commercial and industrial loan growth in particular indicates businesses are borrowing again after extended deleveraging. This is a genuine positive signal for economic momentum, though it complicates the Fed's inflation containment goal.

What This Means for Sector Positioning

Bank sector positioning depends on whether you believe the higher-for-longer regime is sustainable and whether the current earnings strength can persist. Higher-for-longer supports net interest margins. Sustained trading activity supports markets revenue. Recovering loan growth supports commercial banking revenue. Credit quality has begun to soften at the margin, and management teams flagged elevated commercial real estate concerns.